The statistics are sobering: You’re much more likely to become disabled than to die during your practice years. The cost of disability insurance can be daunting — anywhere from two percent to four percent of the income you are trying to replace. Still, few physicians are prepared to rely solely on their personal savings during an extended period of disability. With that in mind, consider these steps for ensuring you have a source of income should you become disabled:
Most employers provide some form of group disability coverage, and a basic employer-sponsored plan certainly helps when you are starting out in practice. Coverage under a basic employer-sponsored plan usually is limited and policies are not portable if you change employers. Well-informed medical and dental professionals treat this type of coverage as supplemental to a more comprehensive personal policy.
Personal policy premiums are higher than group plans, but the coverage and flexibility are superior. Coverage is customizable and provides substantially more control. Individual polices follow you throughout your career and can be designed around your particular practice specialty and lifestyle needs. Unlike group policies, individually owned plans are generally non-cancellable, non-taxable and benefits cannot be reduced.
What is the cost/benefit value of the policy?
Is the policy guaranteed for renewal? Is it non-cancellable?
Is the definition of disability in the policy for a “true and pure” occupation, modified occupation or regular occupation?
What is the definition of income in the policy? Is only base pay (not incentive pay) considered?
Is the policy specialty-specific?
What restrictions or exclusions are included in the policy?
Does the policy include provisions that would reduce the benefit under certain circumstances?
Does the policy include partial benefits?
Does the policy include recovery benefits?
Is the company writing the disability contract financially sound?
Consider beefing up coverage with policy riders to ensure that you obtain benefits specific to your needs and for as long as possible. A rider for Own-Occupation protects you if you are unable to perform the duties of "your own medical specialty" and continues to pay benefits if you are forced to practice a new specialty or even a new occupation because of disability. A Future Purchase Option gives you the right to purchase a pre-determined amount of coverage in the future. In particular, it allows residents and early-career physicians to increase coverage as their income grows without having to go through additional medical underwriting.
If you are working in a solo or small medical group practice, consider overhead continuation insurance for you and your partners. This insurance is relatively affordable and is designed to help pay a professional’s share of office expenses for a period of disability without the need to dip into personal or family savings, or take on more debt.
Work with an agent who specializes in disability insurance for medical and dental professionals. Consider working with an independent agent who can shop your coverage with several disability insurance companies. Each company will look at your location, gender and medical specialty a little differently, so it’s critical to request a variety of quotes.
There really is no time like the present. Because an insurer’s underwriting decisions are based on your age, current health status and accident/illness history, the best time to purchase disability coverage is when you are young and healthy.
Ultimately, the best disability policy is one that is tailored to your specific income replacement needs and specialty. If you choose your options wisely, you may have a reliable source of income even if an illness or injury forces you to stop practicing.
As you consider disability insurance options, you can turn to our firm for guidance on determining the right amount of coverage and options.